December 2021 Blog

Parts of Fair Con­sumer Con­tracts Act al­ready in force

In order to strengthen consumer rights, the legislator has promulgated the German Fair Consumer Contracts Act [Gesetz für faire Verbraucherverträge] by making some significant changes to the German Civil Code [Bürgerliches Gesetzbuch – BGB] concerning the structuring of obligations arising from legal transactions by way of general terms and conditions [Allgemeine Geschäftsbedingungen – AGB] and the termination of consumer contracts in e-commerce.

Invalidity of exclusion of assignments under general terms and conditions

A new provision which now prohibits users of general terms and conditions from excluding the assignability of consumers’ claims was already added to Sec. 308 No. 9 BGB with effect from 1 October 2021. This provision is to apply to consumer claims other than monetary claims if the user of general terms and conditions does not have a legitimate interest in the exclusion of assignment it seeks or the legitimate interest of the consumer in the assignability of the right outweigh the legitimate interest the user of general terms and conditions has in the exclusion of assignment.

The intention behind this is to make it easier for consumers to assign claims they have acquired against businesses to third parties, e.g. debt collection firms, for the purpose of easier enforcement.

Modification of duration of continuing obligations under general terms and conditions

Moreover, the legislator revised the provisions on the duration of continuing obligations under general terms and conditions in Sec. 309 No. 9 BGB. According to the current legal situation, in a contractual relationship the subject matter of which is the regular supply of goods or the regular rendering of services or work performances by a user of general terms and conditions, it is admissible for the general terms and conditions to provide for tacit extension of the contract by up to one year (Sec. 309 No. 9b) BGB), and a notice period of no more than three months prior to the expiry of the contract term as originally agreed or tacitly extended (§ 309 Nr. 9c) BGB) is valid.

The new provision of Sec. 309 No. 9b) BGB under which tacit extension of the contract under the general terms and conditions is admissible only if the contractual relationship is extended for an indefinite period of time and the other party to the contract is simultaneously granted the right to terminate the extended contractual relationship on a maximum of one month’s notice at any time will enter into force with effect from 1 March 2022. Therein, the providing of better protection for consumers against being tied to a contract for too long because of unwanted extensions is intended, and to make it easier for them to switch to other contract structures and providers once the minimum contract term is over.

Furthermore, in Sec. 309 No. 9c) BGB, the legislator reduced the admissible notice period that can be agreed from three months to one month prior to the expiry of the contract term as originally agreed. On the contrary, the possibility in principle provided under Sec. 309 No. 9a) BGB as currently in force was maintained, which states that a minimum contract term of up to two years may also be agreed under general terms and conditions.

Introduction of “quit button”

The German Fair Consumer Contracts Act will also introduce some important changes in the field of e-commerce with effect from 1 July 2022. Sec. 312k BGB as newly introduced, stipulates that if businesses allow consumers to enter into a contract on their website, by means of e-commerce, for the establishment of a continuing obligation against payment of a fee, they will in the future also have to allow consumers to terminate such a contract by means of a termination button (known as “quit button”). However, this obligation will be subject to certain exceptions. According to the Act, such a termination button not only must be clearly legible and its inscription may include nothing else but the words “Terminate contracts here” or a similar clear phrase, but must also be available at all times and directly and easily accessible.

If this provision is not implemented in due time and/or properly, a consumer may terminate a contract for which a termination button is required to be provided at any time without having to observe a notice period.

Practical note

For businesses, the new provisions for the protection of consumers will mainly give rise to a need to adapt their existing standard form contracts, which legally qualify as general terms and conditions. Businesses should therefore review their existing general terms and conditions with respect to the new prohibitions of clauses and adapt them if necessary. Likewise, the introduction of the quit button means that businesses will need to amend and adapt their website technically.

It should also be noted that the legislator has excluded the application of the amendments to Sec. 308 and Sec. 309 BGB to contracts which are already in place at the time the amendments enter into force, but that the obligations under the new provision of Sec. 312k BGB will be applicable from 1 July 2022 also to obligations having arisen before that date.

Katharina Teitscheid, Lawyer
Charlotte Vec, Research Associate
Frankfurt am Main

Charlotte Vec
Research Associate
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